Trusts & Estates Flashcards

Question

Adult adoption (ant intestacy)

Answer 1

- Most states don’t distinguish btwn an adopted child and adult - Homosexual couple. Gives them intestacy rights & some rights they would have if married. Puts partner first in succession. Protect will against challenge. Will preempt everyone who comes after. Only people that can challenge will are those that would take if will were denied probate. If decedents’ other family want standing to challenge will, they would have to contest adoption and overturn it. - Some states (LA included) only allow adult adoptions when there's a parent-child relationship, prevents same sex couples from using it.

Answer 2

Only people that can challenge will are those that would take if will were denied probate (i.e., in intestacy)

Answer 3

- a.k.a. informal adoption, virtual adoption - majority of states recognize equitable adoption – differences in details – done three ways, see below: (1) K made between persons with auth to K for the disposition of the child, (2) evidence of agr on part of equitably adoptive parent and child, or (3) is there a parent-child relationship.

Answer 4

- One conceived before father died, born after father’s death. - Common law presumption of paternity of wife’s child if kid born w/in normal gestation pd (CL = 280 days) - Uniform Parentage Act (some states) – w/in 300 days of husband’s death. Rebuttable presumption (modern scientific tests).

Answer 5

- Original common law – filius nullius. No one’s child, no inheritance rights from anyone (including mother) unless he had children of his own. - All states now allow inheritance from child’s mother. Rules re inheriting from father vary – different states have diff conditions on proof of paternity. Most states – non-marital child can inherit from both parents provided the bio relationship can be proven – usually a time period set for demonstrating paternity. - Establishing biological relationship – 4 methods. Most states permit paternity to be established by various types of evid – subsequent marriage of parents, acknowledgment by father, paternity adjudication during father’s life, or C&C proof of paternity after his death (DNA evidence). - At least one state (NY) says father can’t back out once he acknowledged paternity & subsequent DNA testing showed he wasn’t. A NOLA case has just said the same. Best interests of the child who relied on the man’s earlier acknowledgement estopped the man from later denying paternity.

Answer 6

- Some states have reqts for timely posthumous conception or timely birth (e.g., must be in utero w/in 36 mos or born w/in 45 mos of parent’s death). Also, some states have a notice reqt to administrator of the estate - Case: Limited circs may exist where posthumously conceived children may enjoy inheritance rights of “issue” under MA intestacy law. - R: Where: (1) surviving parent demonstrates genetic relationship btwn child & decedent (2) survivor must establish that decedent affirmatively consented to posthumous conception and to the support of any resulting child. - Some statutory regimes require a writing for affirmative consent

Answer 7

• Transfers to decedent’s children. Gift during donor’s life that’s presumed to be prepayment of at least part of child’s intestate share. Child receiving the gift is one of the donor’s heirs. • Inez’s Estate $450,000 + ($150,000 advance to Ann). Hotchpot = $600,000; Ann - $200,000 - $150,000 advance = $50,000; Bob - $200,000; Charlie - $200,000 • Strong presumption under common law rule & it would be up to Ann to prove gift not intended as an advancement on her share of the estate. Her share is reduced by the amt of the advancement. • If Ann predeceases Inez, has son Don. Don doesn’t take equal share w/ B & C, advance is taken into acct. • Law treats advance as if still part of estate, combines it all, then divides by three. Ann gets a lower share. • “Bringing the advancement into the hotchpot” – to equalize the shares of the heirs. • This is a gift, not conditional or irrevocable. So if Ann given more than her fair share, she doesn’t have to return portion of it. She stays out of division. Estate (w/o the advance) is split btwn the remainder. • There have been changes in the UPC and a few states re advancements - some say it is presumed NOT to be an advancement unless it is shown to be intended as such. - Some states & UPC require intent to make advancement be declared in writing signed by parent or child. (Modern view advocated by UPC – decedent probably disposed of prop as he wished during his life & law should respect that. This isn’t majority rule.)

Answer 8

- Slayer statutes: Prohibits slayer from inheriting from victim. Apply to both probate and non-probate transfers. - Variations on who takes estate. Main rule – killer treated as having predeceased victim. So person who would have taken after killer. - Question of whether a crim conviction is required. In general, it isn’t. - Constructive trust – can’t let someone profit from wrongful conduct, so slayer holds prop like trustee for benefit of victim’s heirs. Mechanism to convey prop to one who in equity would have it.

Answer 9

* Definition: The refusal of an heir or devisee to take the prop he’s entitled to under succession law. * Effect: In almost all states, disclaimant treated as having predeceased decedent, so prop goes to next heir. * Why is it used? To avoid gift or estate taxes to be assessed on several generations of heirs – so skip a generation and go to next. Also to avoid creditors of heir or devisee.

Answer 10

• Wills can be invalid for reasons of (1) substance or (2) form.

Answer 11

- Substance doesn’t fit with the purpose of a will – to do the wishes of the decedent (testator). - Sometimes a will can be seen to be not a valid expression of his wishes - Contest: someone w/an interest (contestant) believes doc isn’t valid expression of testator’s wishes. - Four doctrines of substantive invalidity: testamentary incapacity, duress, undue influence, and fraud (tricked into making a disposition he otherwise would have made).

Answer 12

* 4 capabilities req’d to make valid will * Level of “capabilities” needed: Generally low - capability, not actual knowledge. Low standard for capacity is meant to respect T’s autonomy. * A person who is under guardianship & has a conservator may still be able to make a valid will * Generally seen not as high level understanding as needed for commercial K. Not as low as for capacity for M. * Lucid interval doctrine for insane persons (can still make valid will) * Insane delusion (meet the requirements but is nevertheless operating under insane delusion)

Answer 13

• 4 capabilities req’d to make valid will: T must be capable of knowing & understanding in general way: o the nature and extent of his property o the natural objects of the testator’s bounty (capable of knowing who would inherit w/o a will) o the disposition that the testator is making o relating these elements to one another & forming an orderly desire regarding the disposition of the prop

Answer 14

- Lucid interval doctrine – even if someone is insane, an insane person can make a valid will during a time when his mind is not being affected by insanity. A lucid interval. - The law favors testate succession over intestacy. - Legal presumption in favor of sanity** - Unless the acts directly bear upon the testamentary act, the crazy episodes don’t matter. (E.g., Bequests not confusing, didn’t leave anything twice or to fictional person) - Presumption of testamentary capacity. So, if equivocal evid, can be read two ways, there’s presumption, should be read in favor of capacity. Burden of proving lack of capacity, didn’t meet it

Answer 15

• Subset of testamentary incapacity • Legal term – basis for striking down a will or part of a will. Differs from testamentary incapacity – the person meets the T.I. test, but nevertheless is crazy. So, you can meet the TI test and still not have capacity. • Belief or conviction to which the testator adheres despite all reason and evidence to the contrary. - Distinguishes it from mistake. - Contestant must show that behavior meets the above definition AND that the insane delusion CAUSED the disposition (affected the disposition). • If there’s any supporting evid for the “delusion,” then it’s not insane. - You can be insane on some subjects, but capable of doing business re other matters. - If the insane delusion doesn’t materially affect the will, then can still be valid.

Answer 16

* Undue influence protects agst overreaching by a wrongdoer seeking to take unfair advantage of a donor who is susceptible on acct of age, inexperience, dependence, physical or mental weakness, or other factor. * Undue influence - if the influence exerted over donor overcame donor’s free will & caused donor to make a donative transfer he would not otherwise have made. * Problem – what kind of influence is undue? * Paradigmatic case – caretaker ingratiates himself w/elderly donor, isolating donor from friends/family * Elaborate scheme of presumptions and burden-shifting

Answer 17

• Confidential relationship + Suspicious circs - confidential relationship: legally established relationship of trust where law expects parties to be “other-regarding” - obligated to take other person into consideration beyond oneself. Types: fiduciary (attorney, trustee, power of attorney), reliant (special trust, knowledge), dominant-subservient (caregiver, power differential operates btwn the two) - PLUS suspicious circumstances (confidant received bulk of estate, decedent had weakened intellect, susceptible to undue influence, wrongdoer participated in preparation of the will) - Then contestant entitled to PRESUMPTION of undue influence, so will proponent must then prove lack of U.I. (shifts BoP) - How do you prove lack of u.i.? Prove that (1) you acted in good faith throughout transaction & (2) the testator acted freely, intelligently, and voluntarily • 4 things we look for that give circumstantial evid of UI (burden on will contestant) – garden variety UI o donor was susceptible to undue influence (elderly, dependent, weak willed) o the alleged wrongdoer had an opportunity to exert undue influence (live together?) o the alleged wrongdoer had a disposition to exert undue influence o result appearing to be the effect of the undue influence

Answer 18

- Technique to avoid will contest; also another technique that can backfire - clause that lists reasons for excluding people from will - Danger of statement of reasons – can be questions re how factual, jury may see any discrepancies as being of unsound mind. - Can also backfire b/c it’s provocative, may make someone contest will to clear their name - Testamentary libel – a public document, so if it is libelous, it could lead to damages.

Answer 19

– no contest clause in the will. - If any legatee contests tesstator’s will, they forfeit all benefits under the will - Usually enforceable unless there’s probable cause for challenging the will - For it to work, the contestants must have been left something for them to lose.

Answer 20

• How is duress different from undue influence? - Duress = wrongdoer threatened to perform or did perform a wrongful act that coerced the testator into making a donative transfer that the testator would not otherwise have made. - A more extreme version of u.i. Not just pressure, but pressure made by coercion or violence. • Examples: physical threats; blackmail (I’ll tell your wife about your affair if you don’t leave estate to me) - Duress in prevention of making a will – Latham case is famous for extending the constructive trust to this - wrongdoer held estate in trust for benefit of Ps.

Answer 21

• Fraud in the execution - person misrepresents character or contents of instrument signed by T. Doesn’t carry out T’s intent - impose constructive trust on heirs in favor of intended beneficiaries. • Fraud in the inducement - misrepresentation causes testator to behave differently in will than he would have otherwise behaved. - induced to write a will that he wouldn’t have w/o the misrepresentation - E.g., testator’s first will gave everything to niece Jane. Testator’s 2nd will in hospital before death gives everything to best friend. Nurse testifies she heard friend tell T Jane died. T said then wants friend to haveall. In fact, Jane was alive. - *Will invalid for fraud in inducement only if testator wouldn’t have made bequest had he not been deceived re the facts.`

Answer 22

• Courts in almost ½ states have cause of action for intentional tort of interference with expectancy • Not in probate ct • Claimant files a tort action agst a 3rd party • Elements of the tort (doesn’t have to be directed at testator) - existence of an expectancy - intentional interference with the expectancy - interference involves tortious conduct (includes undue influence, duress, fraud) - causation - damages - If fraud not discovered until after probate, you have an action (so, if fraudulently covered up death)

Answer 23

• Wills Act – formalities in each state. Way of ensuring the will’s authenticity • Type of wills - attested - holographic – handwritten (can be valid in about ½ states if they are properly executed) - notarized – notarization as substitute for witnesses - only attested wills are accepted in all states

Answer 24

• Writing, signature, and attestation. Add’l formal reqts may exist depending on the state. - two or three Ws - requirement that Ws are present at the same time - requirement of subscription (signed at bottom) in some states - reqt that testator publish (declare before Ws that this is my will) in NY • A mistake in formalities can thwart testator’s will

Answer 25

- evidentiary - Shows testator’s intent. Formalities increase reliability of proof presented to ct. Issue of validity of transfer is raised after T dead, unavailable to testify, clarify, or contradict other evid re his intent. - ritual/cautionary - court needs to be convinced that the statements of transferor were deliberately intended to effectuate a transfer. Ppl often careless in conversation & informal writings. Ritual shows he’s in solemn state of mind, doing something he intends to be acted upon - protective - Protects from undue influence, fraud, duress. If you have to go through all the hoops, you really mean it. If you have to have Ws, there’s protection agst testator being imposed upon. - channeling - Standardize the process. Cts don’t have to wonder whether this is a will. Uniformity. Channel the style of wills into a certain pattern, shows the court that it is intended to be a will. - “safe harbor” – testator’s will is like a boat guided into a safe harbor by the formalities that go with will writing. If you fulfill these reqts, you know your will is valid and will be carried out.

Answer 26

- Strict compliance - If not, conclusive presumption of invalidity, even if the defect is totally harmless. - can’t be any deviation from the Wills Act. - Formalities of Wills Act can be used by the ct to get the ends that it wants. A way to invalidate it. - Substantial compliance – test - if a good faith attempt to perform doesn’t exactly meet reqts, performance still considered complete if its essential purpose is accomplished. - Look at the purpose of the formality – if that is fulfilled, ok even if there’s a technical deviation. - Harmless error

Answer 27

- line of sight test (some states) – testator must be capable of seeing Ws in act of signing if he looked. Doesn’t actually have to see. - conscious presence test (more states) – W is in presence if testator, through sight, hearing, or general consciousness of events, comprehends that the W is in the act of signing - UPC – dispenses altogether with presence.

Answer 28

- has a financial stake in outcome – beneficiary, relative or spouse of beneficiary. - concern that the W might testify falsely - At common law – if two Ws reqd and one was interested, it was invalidated - Then it became practice to include more Ws than needed – supernumerary Ws. If it turned out one W had interest, another could be counted on to fill that spot - So many wills going down for this reason, in 18th c. England, purging statutes emerged - purging statute – allowed will attested by interested W to be admitted to probate, made all attesting Ws competent, even if they had an interest. BUT it purged or voided any bequest to interested W. - Most states now have purging statutes • Majority position – require interested W to forfeit only “excess benefit” W receives under will. Whatever will gives him over what he would have received in intestacy. Purged of extra benefit. • Small minority – purges the entire bequest to the interested W and allows probate. • UPC – doesn’t require disinterested Ws. A substantial minority have adopted this approach. - If there are enough Ws w/o interested W, he is a supernumerary & isn’t purged of any benefit.

Answer 29

o Restat. & UPC - must be in writing. Paper not necess, but need medium where markings can be detected o Fundamental and cannot be harmless error if there is no writing. o Must have a document. Video and tape recorded - have been rejected probate under wills act as a writing o Most states haven’t authorized electronic wills (NV has, w/ strict reqts). Problem w/ having them altered

Answer 30

o Law in all states – testators must sign o Purpose – provide evid of finality, it’s not just a draft or notes. o What is accepted as a signature? A lot of latitude as to what constitutes a signature. o Must be done by testator or under his direction in his presence. That he intends doc to be will & the mark to be his signature. Other than that, can have almost any form. An X, Dad, an abbreviation, a nickname, fingerprint, illegible, made with the assistance of another, computerized signature, etc. o Testator must sign before the Ws attest or as part of a single transaction. - General rule about signatures is whether the author intends it to be his signature.

Answer 31

- ALL of these are minority rules - Ad hoc relief from strict compliance - substantial compliance doctrine - Harmless error rule (only 10 states)

Answer 32

- case by case basis. Problem: create diff results, unpredictable - Husband & wife’s wills switched. Each signed other’s will accidentally. Reciprocal wills. Ct denied probate - says we don’t reform wills for mistake. Much of will would have to be changed (from “my brother” to “my brother in law,” etc.). - Almost identical facts as above, but the court admits the will to probate. Argument there’s no testamentary intent b/c Harvey never intended to execute doc he actually signed Ct says no, too formalistic to say intent attaches only to doc prepared, rather than testamentary scheme it reflects. Ct says the will can be reformed. - Two methods of correcting switched wills error - probate the will decedent INTENDED to sign (problem - not signed by decedent, so need subst. compliance or harmless error) or probate the on he DID sign (reform its terms to make sense).

Answer 33

- ct decides whether to excuse an error in manner of execution of will if it shows testamentary intent & satisfaction of purposes of Wills Act. Can find will in substantial compliance. o Key question – whether manner in which an instrument was executed satisfied purposes of Wills Act formalities. If so, it should be deemed in substantial compliance w/ Wills Act & admitted to probate o Prof. Langbein suggests that a formal defect shouldn’t lead to automatic invalidity but to further inquiry: (1) does document express decedent’s testamentary intent, & (2) does its form sufficiently approximate Wills Act formality to enable court to conclude that it serves the purposes of the Wills Act? - Converts conclusive presumption of invalidity b/c of imperfect execution into rebuttable presump. that can be overcome w/ strong evidence of intent and satisfaction of the purposes of the Wills Act. - Consider which promotes the purposes of the Wills Act? Probate or not? - Debate over whether substantial compliance is on the wane or not. Some scholars think it’s still alive

Answer 34

- aka the dispensing power, dispense w/ formalities - adopted in 10 states & some foreign jds. Will treated as if in compliance. Need C&C evid that the decedent intended it as his will. - Proof that the document was intended to be the will. Clear and convincing evidence - Document treated as if it had been executed in compliance w/ Wills Act if proponent of doc establishes by C&C evid that decedent intended doc to be his will (or revocation, alteration, revival). • What kind of evidence? Were there witnesses there that can say he intended this to be his will? • Burden of proof – on proponent of defective instrument & requires he give C&C evidence. • BUT – there has to be a writing. Not harmless error. Signature is of second importance – not impossible for it to be excused for harmless error. Attestation is the easiest to excuse.

Answer 35

- alternative to attestation (W signatures). o Limited usefulness – 2 states o Can be challenged on substantive grounds – lack of capacity, undue influence, duress, fraud.

Answer 36

• Requirements – (1) writing (handwritten), (2) signature • Conflicts of laws issues – what if T writes holographic will in state that allows it, moves to state that doesn’t - two possibilities: - Some states that don’t allow them will permit probate of holo. will b/c was valid where executed - Other states don’t permit probate in these circs and it goes through intestacy. • A will handwritten & signed by testator. No Ws required. Still have writing & signature requirement. • A long tradition of this type of will – ancient Rome. • Majority of states permit holographic wills (27) in all circumstances. • MD, NY allow for members of military (lives more circumscribed, could be going into danger w/o time) • Why would a testator choose to make a holographic will? o Need it fast, injured, dying – expediency o Expense o No lawyers around nearby • Tractor fender scratching – considered sufficient holographic will, probated. (It was a writing & signed)

Answer 37

• Discerning testamentary intent • Lack of Wills Act functions • “Conditional Wills” - E.g., “I am going on a journey, may not return. If I don’t, I leave everything to adopted son.” Testator returned from journey but died months later. S. Ct. ordered will probated. - Most cases presume language of condition isn’t meant as condition but rather is a statement of the inducement for making the will.

Answer 38

- None of these has majority of states • 1st generation rule – had to be “entirely written, signed, & dated” in T’s hand. Substantive provisions, signature, etc. Problem – any non-holographic material on will could lead to invalidation. • 2nd generation rule (1969 UPC) – still followed in 7 states. Req’s only that “signature & material provisions” be in T’s own handwriting. In an effort to stop thwarting Ts’ clear testamentary intent. - Surplusage theory – there's surplus language. Handwritten portion of doc should be given effect as holographic will if it makes sense w/o surplus text not written by testator. - Some cts said can’t probate b/c some of preprinted language was the evidence of testamentary intent. Courts were refusing to look at preprinted text for context • 3rd generation rule (1990 UPC). “Material portions” must be handwritten (words identifying prop & devisee). Then extrinsic evid is allowed to establish testamentary intent (including pre-printed portions). • Testator fills in blanks by hand, doesn’t realize it needs to be attested by Ws. How can we save such a will? - Harmless error (only available in 10 states) – C&C evidence of intent - Probate it as a holographic will – Problem: it’s not all handwritten

Answer 39

- subsequent writing - physical act plus intent - codicil (can add to or revoke)

Answer 40

- can revoke expressly or impliedly - expressly – “I revoke all prior wills” - impliedly – inconsistency or implication (revocation by inconsistency) - **subsequent writing must comply with Wills Act formalities

Answer 41

- MUST have intent and purpose of revoking the will - Physical acts – burning, tearing, canceling, obliterating, destroying - Canceling – must cross out or void on the text of the will – not just on the back. If written words used for the purpose, they must be so placed as to physically affect written portion of will, not merely on blank parts of the paper on which the will is written. - Revocation by physical act plus intent – must (1) do one of the acts specified AND (2) accompanied by intent to revoke. • UPC allows for revocation by physical act of cancellation whether or not cancellation touches any of the words on the will. Not the majority view. • In 10 states that have harmless error rule, it also applies to acts of revocation. Some states allow this for physical act revocation, some don’t. Harmless errors excused with C&C evidence of intent.

Answer 42

* Definition – testamentary instrument that supplements original will (rather than replaces it). Doesn’t replace all prior instruments. Must have Wills Act formalities. Doesn’t make complete bequest of entire estate. * Can either add to or revoke will. * Supersedes earlier will to the extent of inconsistency between them. * Any property not disposed of in the codicil is disposed of in accordance with the older will. * Revocation of codicil doesn’t revoke the underlying will * Revocation of codicil is presumed to revive those portions of will that were superseded with codicil. * Prevailing rule – revocation of will revokes all codicils unless T’s intent was for codicil to operate independently / stand alone. The Restatement says differently.

Answer 43

• Law presumes that a will that was last known to be in testator’s possession but can’t be found (or is found in mutilated condition) can’t be found because testator destroyed or mutilated it w/ intent to revoke it. • presumption vs. lost wills - lost will can be probated if contents can be proved - presumption only arises if will last known to be in T’s possession (we have a sense of where it was) • If a lost or mutilated will last known to be in possession of someone other than T, there is no presumption of revocation, and the will is entitled to probate (unless there is proof that the testator in fact revoked it) • If lawyer loses will held for safekeeping, lost but not revoked, can be probated if contents can be proved • Only a preponderance of the evidence is needed to rebut the presumption (in most states)

Answer 44

• Doctrine of DRR - If testator undertakes to revoke will upon mistaken assumption of law or fact, revocation is ineffective if testator wouldn’t have revoked the will but for the mistaken belief. • Typical case – T destroys prior will under belief that new will valid, but it’s not for reason unknown to T. • If court finds that T wouldn’t have destroyed old will had he known new will was ineffective, ct will disregard revocation & probate destroyed prior will. • Applies to partial or total revocation • Requirements: o Valid will o Revoked o Mistaken belief o Wouldn’t have revoked but for mistaken belief • Result: Ineffective revocation – probate the destroyed prior will • Presumed that T would prefer old will to intestacy. • Often mistaken belief that you can revise a will by crossing something out & writing something else w/o any formalities. - It is generally accepted that you can have a handwritten codicil to typewritten will where holographs allowed & it is signed & dated. So, if info all hadwritten & signed & dated, then holographic codicil. (But not simply crossing out one number & filling in another – could argue DRR & get typewritten amt – better than nothing – mistaken belief that she could make this change)

Answer 45

• Majority position – revived by revocation of revoking instrument - Previous will is revived provided that is the T’s intent (determined by circs) • Minority position – must be validly re-executed or republished to revive

Answer 46

- change in family circumstances such as divorce, marriage, birth of kids – revocation of existing will. • Divorce or divorce + property settlement - revokes provisions for the ex-spouse (in all states) - Watch for effect on provisions for ex-spouse's relatives (some states it also revokes these provisions, like for a step-child) • Marriage: - (1) Old rule: premarital will revoked on marriage - rule not completely vanished, but most states say NO revocation upon marriage - (2) omitted spouse takes intestate share • Birth of Children - (1) marriage followed by birth of children revokes pre-marital will - (2) omitted child takes share of parent's estate - Most states have statutes that protect kids – give kids share of estate when will made pre-child.

Answer 47

- Specific devise – disposition of specific item of testator’s property - General devise – devise that confers general benefit, rather than specific asset (usually cash) - Residuary devise – remainder of the testator’s property left after other specific devises are taken - Class gift – if devise is to class of persons - Void devise - when beneficiary predeceased making of the will (or is an animal) - Lapsed devise - beneficiary was alive when will was made, predeceased testator - Demonstrative devise (hybrid btwn gen & specific. Refers to gen benefit, but points to specific source from which it will come. E.g., sum of $100K to be taken from sale of my Apple stock. Suppose sale doesn't bring enough to satisfy? Most jds, remainder will be paid from other parts of the estate)

Answer 48

``` o First rule: if specific/general devise lapses b/c devisee predeceases testator, devise falls into the residue o Second rule: if devise is class gift, surviving members of class divide devise btwn surviving members o Third rule: if whole of residuary devise lapses, heirs of testator take in intestacy o Fourth rule: No residue of a residue – can’t be residuary gift of a residue; i.e. if Albert has two residuary devisees, C & D, & C predeceases A, at common law lapsed devise passes to A’s heirs, not D - Has changed in many states, believe intent would’ve been for other devisee to take entire residue. Impt change of majority rule from no residue of a residue & intestacy to entire residue to surviving residuary devisees o Fifth rule: if devisee is to non-person, or if the devisee predeceases the testator - it is void ```

Answer 49

expresses wish or desire that devisee will use funds to care for another (like dog). But not legally enforceable, simply moral duty to take care of the dog with the funds.

Answer 50

o Substitution of other beneficiaries o Effect of anti-lapse statute upon a lapsed gift. They don't prevent a lapse, they substitute other beneficiaries, usually dead beneficiary's descendants, if certain requirements are met. o Theory behind anti-lapse statutes is presumed intent - T would rather it go to descendants than dealt w/ under common law of lapse. o UPC - predeceased devisee is related to T in a prescribed way (usually close), UPC req’s it be grandparent or lineal descendent of grandparent of testator. One or more descendants survive him & T. Then, those are substituted for the predeceased devisee. o Bc of the closeness of relationship, presumed that testator would prefer this. o This is a default rule - testator can put in will that if X predeceases me, it goes to Y. o "Words of survivorship" - If T devises estate to her living brothers - does this mean the descendants of ones that predeceased T don't take their ancestor's share? Does this show an intent contrary to anti-lapse statute? Actual language is often boilerplate, so may not show intention at all. UPC says such language may not reflect actual intention. This has come under criticism - imposing rules that go agst actual language of will. Some states do this, but majority apply the words of survivorship.

Answer 51

``` o treated differently than gift to individual. Surviving members divide total gift (including dead member's share if no antilapse statue). o Class gift arises if T was group-minded - uses class label in describing beneficiaries (e.g., "A's children" or "to my nephews and nieces"). o Another indicator of class gift - identities & shares of beneficiaries are subject to fluctuation. o Even when named, a court could see it as a class gift ```

Answer 52

- Controlling principle: T's intent (1) if evident, (2) if not evident: rules. - if intent evident, then go with it - if not - rules of construction must be dealt with

Answer 53

- Ademption - failure of a testamentary gift (• When a devise adeems, it is taken away) - 2 types - Stock splits: change in form, not substance - Exoneration of Liens - Abatement

Answer 54

- usually applies to general pecuniary bequests, not specific bequests - Failure of testamentary gift bc T has already made inter vivos transfer of similar prop to beneficiary btwn execution of will & death, in satisfaction of bequest. Partial or complete. - Presumption of ademption by satisfaction where advancements are made (like mom gives $60K to one daughter, $10K to another), presumption this is a pre-payment on the person's inheritance. If T is parent of beneficiary (or parent-like figure), then after making his will, parent gives B prop similar to that in will (usually pecuniary), there is rebuttable presumption that the gift is in satisfaction or partial satisfaction of the terms of the will. - What will rebut this presumption? Prove that it wasn't the T's intent. E.g., she could write it down that it isn't meant to be pre-payment (some states require that intention of T to adeem by satisfaction be shown in writing, bc it's hard to determine intent).

Answer 55

- Failure of specific devise, partially or completely, bc asset isn't in T's estate at time of death. - Applies only to specific devises of real and personal prop. - Could devisee claim equivalent prop from T's estate? (1) identity theory, (2) intent theory. - Identity theory: Traditional (& still majority) common law rule: Can't claim equivalent prop. Specifically devised Blackacre. If exact site that T devised isn't in estate, gift adeems, beneficiary receives nothing. Gift is gone. - Suppose she sold Blackacre and used proceeds to buy Whiteacre? Under identity theory, can't trace funds back & get Whiteacre. Under intent theory, he can do that. - A minority of jd (& UPC) have adopted "intent theory." If specifically devised item not available, devisee might be entitled to alternate gift or cash value, provided he can show that the T intended him to receive it.

Answer 56

* CL doctrine - Presumed that T wanted the debt paid out of residuary of estate and for devisee to take prop free of mortgage. * Modern position - make devisee take the prop subject to the mortgage * Should make clear in the will whether real estate passes subject to any mortgages or liens.- states split

Answer 57

• if an estate lacks sufficient assets to pay the decedent's debts as well as all devises. • Definition - reduction or elimination of a devise to pay a devise of higher priority or to pay an obligation of the estate. • T can indicate an order of abatement if he wishes. - Default order of abatement: usually - residue abates first - general devises abate second - specific & demonstrative devises abate last • Problem w/ order - may not be the proper way to look at residuary devisee. It's often person the T wants to benefit the most, like a son. • Each tier is reduced pro rata. • Some courts may (under UPC) change this if it appears to be contrary to the T's intent.

Answer 58

- legal arrangement created by a settlor in which a trustee holds prop as a fiduciary for beneficiaries. • Trustee manages prop for one or more beneficiaries. • Trustee has legal title to trust prop, which allows him to deal w/3rd parties as owner of prop. Beneficiaries have equitable title to trust prop, allows them to hold trustee accountable for breach of fiduciary duties.

Answer 59

- Franciscan friars came to England in 13th c. Members took vow of poverty, rules prohibited friars from owning property. Needed a way to survive when spreading message. Pious donors (often deathbed) would give friars money. Benefactors couldn't donate land & prop directly bc ban on ownership. Instead, they conveyed it to friends of friars to hold for friars’ use. - Called a “use” (from Latin word “opus”) - feoffer to uses - settlor - feoffee to uses - trustee - cestui que use - beneficiary - While legally titled to another, friars would manage it (diff from now, where beneficiary doesn't manage). Feoffee to uses was just a figurehead. - Not all friends of friars were honest. Problem if friars tried to enforce the gift. - Church cts would sometimes enforce uses to friars. Not enforceable in English law cts - Chancery ct - headed by Lord Chancellor. Took up cause of friars. Ct of equitable jd, not of common law. Chancellor could offer relief for inequities that didn't have particular form of action. Chancellor began to compel feofees to uses to perfom as they promised (15th c.). Once uses enforceable agst feofees, device took off

Answer 60

- The use became a will substitute - landowner O could enfeoff to A and heirs the use of O during O's lifetime. So, transferring title, but for his own benefit. And then to the use of such persons as O might appoint by will (could name a more favored son as having use of prop). Chancellor would enforce the use (circumvented rule of primogeniture) - Also used to avoid feudal incidents (death taxes of landholders paid to crown). Could appoint addl feofees to replace those that died off. This wasn't considered an incident of inheritance, not taxed. Feofee just figurehead. Landholders could add feofees to legal title. Landowner continued to reap profits from land. Result - big drop in tax revenue. Pissed off Henry VIII. - Flexibility of use - avoid primogeniture, avoid feudal incidents.

Answer 61

- Henry VIII's reform for uses (1535/36) - uses not made illegal, but made useless. Legal title taken away from feofee to uses & given to the cestui que use. He retains benefit, dies w/ legal title, but his heir would have to pay feudal incidents on cestui's death. As if he took away title from trustee in modern trust, gives it to beneficiary responsible for everything - got rid of split in ownership. - Lawyers argued (& cts held) that it didn't pass to cestui alone if feofee was given active duties to perform. If a duty was imposed on feofee to deal w/prop in special way, different than figurehead. Where the requirement that for trust to exist there must be active duties of trustees comes from (a passive trust fails). This becomes the trust. - Emergence of the Trust - modern trust was when Chancery asserted jd over these transformed uses

Answer 62

- Trustee: managerial power and fiduciary duties | - Beneficiary: enjoyment of property

Answer 63

- Inter vivos - created during settlor's lifetime. Can be created by (1) Declaration of trust - in writing or oral - e.g., "i've deposited X dollars in acct, I am holding it in trust for you." There, settlor also trustee. Doesn't require deed of gift, delivery. Just manifestation of intent to hold prop in trust for beneficiary. Real prop needs to be writing - statute of frauds. (2) deed of trust - transferring prop to trustee. If settlor not trustee, a deed of trust is necessary - shows that the trustee has managerial powers. DoT or trust prop must be delivered to the trustee. - Testamentary - created by will and arising in probate

Answer 64

Settlor (creates the trust; aka grantor, trustor), Trustee, Beneficiary (one or more) - Don't necessarily have to be 3 diff persons. Settlor can also be a trustee. Can also be beneficiary provided there’s more than one beneficiary. - Settlor - creates trust, either by will or inter vivos (during life)

Answer 65

- manifestation of settlor's intent (intent to create trust, desire to create fiduciary relationship) - ascertainable beneficiaries (who can enforce trust) - specific property (the res) to be held in trust - some trusts - a writing (to satisfy the Wills Act or Statute of Frauds)

Answer 66

- if sole trustee is also sole beneficiary (holding in trust for myself) - legal & equitable title are not split, they are merged, and there’s no trust. Must be someone able to enforce agst trustee.

Answer 67

- inter vivos gift requires delivery (can be actual/manual, constructive, or symbolic delivery) - look to see if there's intent to create fiduciary relationship

Answer 68

• There has to be specifically identified prop (res) to be held in trust & it has to have bifurcated ownership (i.e. supposed trustee has to treat the prop as trustee) • Any transferable interest in any property is ok for trust. Can transfer shoes to someone else. • Contrast resulting "trust" - equitable reversionary interest caused by an incomplete disposition - A resulting trust is an equitable reversionary interest caused by incomplete disposition - arises buy operation of law; not really a trust - Trustee holds remainder in resulting trust for settlor or settlor's heirs. But not actual managerial. Trustee's only duty is to transfer prop to legal owner. An equitable solution to the problem of incomplete disposition and the leftover prop has to be transferred to someone.

Answer 69

• have to be ascertainable beneficiaries who can call trustee to account - "Friends" isn't ascertainable beneficiaries. You don't know who will be able to enforce the trust. - Pet trusts - no ascertainable beneficiary. But, statutory purpose trusts now available for pet beneficiaries in majority of states - growing demand for enforceable trusts for animals. Problem was enforcement. - allow trust for pet or other noncharitable purpose if purpose isn't capricious, agst public policy - enforcement mechanism - by a person appointed by the settlor or by the court

Answer 70

• Not required by law of trusts per se - oral trust is fine for personal property, even when it's a will substitute - UTC requires that existence of oral trust must be established by C&C evid. Can be oral testimony. - Oral trust can't be for real prop, but an oral inter vivos trust of cash, which is personal prop., is ok • Applies under Wills Act and Statute of Frauds

Answer 71

- Enforceable • Characteristics: Testamentary disposition that appears to give absolute gifton its face, but concerning which apparent beneficiary has made promise to settlor to act as trustee for beneficiary not identified in will, but to which settlor actually intends to transfer legacy. • Effect: If apparent beneficiary reneges on promise, ct will admit evid to prove promise in suit in restitution, & will enforce by constructive trust imposed on apparent beneficiary for benefit of intended beneficiary. • Result: The intended trust given effect & unjust enrichment of the faithless trustee is prevented. • The devisee has orally agreed to be a trustee to distribute it elsewhere. • Effectively, trust funds distributed through constructive trust assuming existence of promise can be proven.

Answer 72

- Generally unenforceable - Characteristics: Testamentary disposition that indicates that taker is to hold legacy as trustee rather than benefit from it personally, but doesn’t identify beneficiary of trust. • Effect: Weight of authority is that legacy to would-be trustee, & thus semi-secret trust itself, fails for lack of an ascertainable beneficiary. • Result: Prop devised in semi-secret trust goes either to intestate heirs of T or to residual beneficiary under will in resulting trust (equitable reversion). • American invention. • There is some feeling that these two types should be treated the same - constructive trust imposed. Because there will be unjust enrichment either way. This is how it's done in England.

Answer 73

Possible relief in restitution by constructive trust to prevent unjust enrichment from the breach of an oral trust to convey land. • Tell clients DON'T do this! • What if trustee doesn’t fulfill terms - can beneficiary enforce trust under Statute of Frauds (requires writing for conveyance of land). • Who gets the land? Cases are split • Characteristics: Settlor enters oral agreement to convey land to Trustee, who is to use it for benefit of Beneficiary (who might be Settlor himself) for either a period of time; upon expiration of time, Trustee is to convey land either back to Settlor or to another Beneficiary; but Trustee does not fulfill terms of oral agreement. • Effect: Two possibilities appear in the cases (cases are spilt): - Ct may permit Trustee to retain land because Statute of Frauds prohibits proof of oral trust of land. - Ct may allow relief in restitution by constructive trust imposed on Trustee, in favor of Settlor or Benefic. • Result: Cases indicate that whether ct permits Trustee to retain land depends on equitable doctrines of unjust enrichment and unclean hands. - A constructive trust in favor of Settlor and/or Beneficiary will be imposed if: (1) transfer wrongfully obtained by fraud or duress; or (2) trustee was in confidential relationship w/ Settlor - A constructive trust in favor of Settlor will not be imposed if Settlor’s conduct in making the transfer met the standard of “unclean hands” • Unclean hands - not entitled to a remedy in equity & fairness when he has been fraudulent or misrepresenting. Can't come to ct of equity w/unclean hands & expect to have rights recognized

Answer 74

• Beneficiary can’t alienate interest he has in trust on his own. Creditor can't make trustee make distribution to beneficiary. • Useful for asset protection. Trust where trustee has discretion over when, to whom, or in what amts to make distribution. - Contrast mandatory trust - trustee must make specifiied distributions to identified beneficiary) • Rationale - give flexibility to trustee. There will be changing circs of beneficiaries, law might change. • Effect: In general, creditor of a beneficiary has no recourse agst beneficiary’s interest in discretionary trust, &beneficiary cannot voluntarily alienate his interest in the trust. Asset protection. • Three principal types of discretionary trusts: - Pure Discretionary - Support Trust - Discretionary Support Trust

Answer 75

- Distinguishing characteristic: Trustee has sole, absolute, or uncontrolled discretion over distributions - Beneficiary doesn't have prop interest for creditor to attach bc it can't compel trustee to pay anything to him. - If trustee has abused discretion, he can be compelled to make distribution. But creditor can't stand in beneficiary's shoes and compel payment. - Effect: In general, creditor of beneficiary has no recourse agst beneficiary’s interest in discretionary trust, & beneficiary cannot voluntarily alienate his interest in the trust. Asset protection. - Result: Creditor seeking payment may obtain a “Hamilton Order” from a court. • Order says that if trustee decides to make distribution, creditor must be paid before beneficiary. • It thus allows creditor to reach beneficiary’s interest by attachment of present or future distributions from the trust. • It can’t be circumvented by trustee paying directly for beneficiary’s expenses if trustee has notice of Hamilton order.

Answer 76

- Distinguishing characteristic: The trustee must make distributions as necessary for the beneficiary’s support. Partially discretionary. - Effect: Creditor has recourse agst beneficiary’s interest if creditor supplied beneficiary w/ necessities for his support. • E.g., grocers, doctors, pharmacists and • In most states, creditors with claims against the beneficiary for child support or spousal support. - Result: Creditors other than suppliers of necessities can’t recover against the beneficiary’s interest.

Answer 77

- Distinguishing characteristic: Trustee has uncontrolled discretion to make distributions to beneficiary for a particular purpose, such as support or education. - Effect: Courts tend to treat discretionary support trusts like pure discretionary trusts. - Result: Beneficiary’s creditors can’t compel distribution, but the trust may be subject to a Hamilton order.

Answer 78

• Characteristics: A trust that imposes a disabling restraint in form of a spendthrift clause, which prevents beneficiary from transferring his interest in the trust. E.g., “The interests of beneficiaries shall not be subject to the claims of any creditor, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered.” • Hamilton Order no good here • Effect: Trustee can make distributions to or for benefit of beneficiary w/o regard to any claims by creditors, who cannot attach a protected interest. - Creditor may only attempt to collect from beneficiary after a distribution to him is made. - Trustee can pay beneficiary’s expenses directly using trust prop, rather than distributing to beneficiary. - Exceptions to the spendthrift rule exist: - many states for child support & spousal support can be enforced agst spendthrift trust (attachable) - For claimants who supplied beneficiary w/ necessities - Lawyers who helped by providing services necessary to protection or enforcement of beneficiary's rights under trust. - In N.Y. & some other states, under station-in-life rule, creditors can reach spendthrift trust income in excess of amt needed for support of beneficiary in accordance w/ station in life. Creditors can only reach excess. - The trend is against state courts’ recognizing exceptions for tort creditors of the spendthrift beneficiary. - Gray: argued spendthrift trusts would form a privileged class who could practice every fraud & roll in wealth. An aristocracy.

Answer 79

- If settlor & all beneficiaries consent, an irrevocable trust may be modified or terminated even if it contains a spendthrift clause. • If settlor is no longer alive, modification or termination under this rule is impossible. • have to get consent of everyone. If settlor dead - nope

Answer 80

- Claflin Doctrine | - The Equitable Deviation Doctrine (aka deviation)

Answer 81

- Rule: A court may modify or terminate a trust by consent of all beneficiaries provided the modification or termination is not contrary to a material purpose of the settlor. - Problem: Determination of whether some condition is a material purpose of settlor or not. - Types of trust conditions usually found to indicate a material purpose: • Spendthrift clauses • Discretionary clauses • Support clauses • Postponed enjoyment clauses These embody in their terms a material purpose - the purpose is to provide continued support. - Condition that may or may not be found to indicate a material purpose: Clause providing for successive beneficial interests

Answer 82

- Majority Rule (traditional law): Ct will permit trustee to deviate from administrative terms of trust - if compliance would defeat or substantially impair accomplishment of purposes of the trust - in light of changed circumstances not known to the settlor and not anticipated by him, - but not merely because such deviation would be more advantageous to beneficiaries than compliance with the term. - Minority Rule (UTC & Restatement; WA State): ct may permit trustee to deviate from both administrative and dispositive provisions of a trust under a two-factor test: - if [1] because of circs not anticipated by settlor, [2] modification or deviation will further the purposes of the trust.” (i.e., not just if the purpose would be frustrated without)

Answer 83

- Consolidation and division of trusts: Courts regularly permit combination and division of trusts to increase efficiency of management, e.g. Eliminating redundant costs; Grouping only beneficiaries with like tax or investment situations in a single trust; Reducing # of beneficiaries in one trust if so many that trust management becomes unwieldy - Uneconomic trusts: The UTC and the Restatement 3rd both authorize modification or termination of trusts which lack economic value. If the whole trust property lacks value.

Answer 84

• (1) Plain meaning rule (aka no extrinsic evid rule): cts won’t take evid to vary a will, unless there is a particular type of ambiguity. Can be admitted to resolve an ambiguity. • (2) No reformation rule • (3) Ambiguity - types & changes - Latent ambiguity - apparent only when will examined in light of extrinsic evid. (2 nieces named Mary). Looks clear in will, ambiguity hidden until you start applying it to facts. Extrinsic evid has long been allowed to resolve these ambiguities. - Patent ambiguity - evident from face of a will (e.g., 1/2 to A, 1/2 to B, and 1/2 to C). Under traditional law, extrinsic evid not allowed to resolve a patent ambiguity. The bequest would just fail. • These rules have been moving away from traditional principles, allowing extrinsic evidence. Sometimes open correction of mistakes in wills (but still minority position). We are trending in that direction. • Some courts have abandoned the distinction btwn latent or patent ambiguities. Look for evidence of what was meant and if still ambiguous, the court can go to extrinsic evidence

Answer 85

• Reclassifying as ambiguity - Allows ct to remove bad street # bc it erroneous; “less essential particulars may be rejected provided the remainder of the description clearly fits” - Thus, when street # is removed, will ambiguous bc refers merely to street, not piece of prop - Court created the ambiguity • “Detail of Identification” - no ambiguity in will; however, middle initials & street addresses can be mistaken - “details of identification, particularly matters as middle initials, street addresses, which are highly susceptible to mistake, should not be accorded such sanctity as to frustrate otherwise clear intent - issue of “Details of identification” allows evidence to be admitted

Answer 86

- CT S. Ct. took bold step by stating that extrinsic evid of mistake by a scrivener is admissible &, if proved by C&C evid, court may reform the will to reflect the testator’s actual intent - Herceg: 1 step further in type of mistake - Computer software mistake, which deleted the portion of the will listing the name of the beneficiary - some case law says court can’t supply missing names; some cases allow extrinsic evidence if there’s an ambiguity such as missing names • Requires a high standard of evidence – C&C - Contrary View: Reformation would “open the floodgates of litigation and lead to untold confusion in the probate of wills ... invite disgruntled individuals excluded from a will to demonstrate extrinsic evidence of the decedent’s ‘intent’ to include them”

Trusts & Estates Flashcards

(110 cards)